SAN FRANCISCO / Transit unit limited to $50 million loans

Ilene Lelchuk

Published
4:00 am PST, Thursday, April 1, 2004

A city transit improvement agency whose accounting and fiscal management practices were recently called into question will scale back its plans to borrow $200 million to fund construction of the Third Street light-rail and other ongoing projects.

The San Francisco Transportation Authority, which is governed by the Board of Supervisors, instead will issue up to $50 million at a time in commercial paper, a form of debt similar to bonds. It can seek approval for additional borrowing in increments of $50 million -- up to a total of $200 million -- once the initial funds are spent.

In approving the plan Tuesday, the supervisors, acting as the authority's governing board, also requested quarterly spending and earnings reports from the agency. The authority was created in 1989 to administer the revenue collected from a new voter-approved half-cent sales tax to fund transportation projects. Voters reauthorized the tax last November.

Officials at the San Francisco Municipal Railway, which operates the city's bus, light-rail and cable car systems, have said Muni needs $31 million immediately to continue transit upgrades, including the Third Street light- rail line.

A recent audit by the city controller's office found that the authority's weak bookkeeping practices left it vulnerable to fraud; that it was incurring overdraft charges by failing to balance its checkbook; and it was missing out on potential interest earnings because of its cash management decisions.